Morning Gold Market Report

Compiled 05/15/12 6:00 AM (CT) Statistics: London Gold Fix $1,559.00 $-4.00 LME Copper Stocks 216,350 tons -1,950 tons. GOLD MARKET FUNDAMENTALS: (6:00 AM CST) After another range down thrust that temporarily sent June gold prices down to the lowest level since December 29th, the gold market managed to bounce away from the initial lows. In addition to a slightly improved macro economic view overnight, the gold market also seems to have found some increased physical demand talk from both India and Asia overnight. Therefore some traders are suggesting that the $1,550 level in June gold futures contract could be seen as some form of value zone on the charts, but residual fear that Greece might leave the EU and fears of more slowing in China probably makes it difficult to fully throw off the pattern of weakness seen in gold for most of this month. Talk of some tightening of prompt gold supply has probably discouraged some sellers of gold overnight, but it is unclear if that type of demand can consistently offset rather broad based global slowing fears. Some traders attribute the attempt to bounce from the initial lows this morning to the better than expected German growth/export news and that in turn probably increases the importance of the US retail sales figures later this morning. Unfortunately expectations for US retail sales call for only a minimal gain and that might not serve to bolster gold and physical commodities against the prevailing risk-off vibe. While the US is also scheduled to release inflation figures this morning that news isn't expected to have a noted impact on gold prices. While gold bulls remain hopeful of central bank assistance ahead, such action doesn't appear to be imminent. Comex Gold Stocks were 11.004 million ounces down 10,554 ounces. Gold stocks have increased 11 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) The Hong Kong market overnight managed a positive session after a long string of recent losses. A decline in foreign direct investment in China also left economic views suspect in the region but it did appear as if somewhat favorable German economic numbers overnight helped the Asian markets find some support. European equity markets were initially mixed overnight with gainers barely out numbering the losers. While news of a +0.5% gain in German GDP wouldn't normally be a big development, expectations for activity in the Euro zone have really been deflated recently and the trade seems to have garnered a small measure of confidence from the positive quarter over quarter performance in Germany. Early action in the US equity markets also showed some strength, but it was unclear whether today's gains were simply short covering or an actual improvement in sentiment. The focus of the trade later today is likely to center on the US retail sales report, which is expected to post a very minimal gain.